Exploring Financial Literacy, 2nd Edition Page 61 (67 of 278)

Chapter 3 Budgeting: Using Your Money Wisely 61 Copyright Goodheart-Willcox Co., Inc. May not be reproduced or posted to a publicly accessible website. _______ 8. How is discretionary income calculated? A. income – fixed and variable expenses = discretionary income B. income – fixed expenses = discretionary income C. fixed and variable expenses – income = discretionary income D. fixed expenses – variable expenses = discretionary income _______ 9. What is the fi rst step when creating a budget? A. Subtract the total expenses from the total income. B. List the amounts of income and total them. C. List the fixed and variable expenses. D. Select a time period for the budget. _______ 10. When should you update your budget? A. When income increases. B. When income decreases. C. When expenses change. D. All of the above. Build Your Vocabulary For each word or term, write the correct definition using your own words. 11. budget ______________________________________________________________________________ ______________________________________________________________________________ 12. fixed expense ______________________________________________________________________________ ______________________________________________________________________________ 13. variable expense ______________________________________________________________________________ ______________________________________________________________________________ 14. charitable contribution ______________________________________________________________________________ ______________________________________________________________________________ 15. discretionary income ______________________________________________________________________________ ______________________________________________________________________________

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Chapter 3 Budgeting: Using Your Money Wisely 61 Copyright Goodheart-Willcox Co., Inc. May not be reproduced or posted to a publicly accessible website. _______ 8. How is discretionary income calculated? A. income – fixed and variable expenses = discretionary income B. income – fixed expenses = discretionary income C. fixed and variable expenses – income = discretionary income D. fixed expenses – variable expenses = discretionary income _______ 9. What is the fi rst step when creating a budget? A. Subtract the total expenses from the total income. B. List the amounts of income and total them. C. List the fixed and variable expenses. D. Select a time period for the budget. _______ 10. When should you update your budget? A. When income increases. B. When income decreases. C. When expenses change. D. All of the above. Build Your Vocabulary For each word or term, write the correct definition using your own words. 11. budget ______________________________________________________________________________ ______________________________________________________________________________ 12. fixed expense ______________________________________________________________________________ ______________________________________________________________________________ 13. variable expense ______________________________________________________________________________ ______________________________________________________________________________ 14. charitable contribution ______________________________________________________________________________ ______________________________________________________________________________ 15. discretionary income ______________________________________________________________________________ ______________________________________________________________________________

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Exploring Financial Literacy 62 Copyright Goodheart-Willcox Co., Inc. May not be reproduced or posted to a publicly accessible website. Apply Your Math Skills Calculate the answers to the following problems. Show your calculations. 16. The weekly spending record for Alice Wong for the week ending October 7 is shown in the chart that follows. How much has Alice spent for the week? Total the amounts for each day and for the week. Write your answers in the chart. Weekly Spending Record Alice Wong For the week of October 7, 20-- Amounts Spent Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Total Fixed expenses Bus fare 1.25 1.25 1.25 1.25 1.25 Savings deposit 25.00 Total fixed expenses 1.25 1.25 26.25 1.25 1.25 0.00 0.00 Variable expenses School lunches 3.00 2.95 3.75 3.60 4.10 School supplies 12.50 4.50 2.25 E-book purchases 1.50 7.75 Meals with friends 5.50 8.75 6.75 Clothes and shoes 6.30 25.89 Total variable expenses 15.50 4.45 13.75 11.35 12.65 34.64 6.75 Total expenses 17. Latoya’s expenses for a typical week are $75. Her monthly income is $325. What will Latoya’s monthly expenses be if she spends this amount every week? ______________________________________________________________________________ ______________________________________________________________________________

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Exploring Financial Literacy 60 Copyright Goodheart-Willcox Co., Inc. May not be reproduced or posted to a publicly accessible website. Review Your Knowledge Choose the correct answer for each of the following. _______ 1. You can track expected income and expenses for a given period using a(n) _____. A. financial goal B. investment C. budget D. deficit _______ 2. Your _____ will guide you as you create your budget. A. goals B. age C. disposable income D. spending _______ 3. Money you receive for working at a job is an example of _____. A. income B. an expense C. discretionary income D. a financial goal _______ 4. You paid $16.50 for a haircut. This amount represents a(n) _____. A. income B. expense C. goal D. charge _______ 5. Last week, you paid $4.50 for lunch on Monday, $3.00 for lunch on Tuesday, and $2.75 for lunch on Wednesday. The amounts you paid for lunch are _____. A. fixed expenses B. variable expenses C. discretionary expenses D. discretionary income _______ 6. You take weekly music lessons that cost $15 per week. This is an example of a(n) _____. A. fixed expense B. variable expense C. voluntary expense D. income _______ 7. What does the phrase “pay yourself fi rst” mean? A. Set aside money for all your wants in your budget. B. Write yourself a check for spending money every week. C. Set aside money to save as part of your budget. D. Set aside money after all expenses are met.

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